Interview with the Outside Directors
Shingo Ishizaki

Yuko Asami

Kiyoshi Mukohara

Outside Director, Audit andOutside Director, Audit andOutside Director, Audit andSupervisory Committee Member

Supervisory Committee Member

Supervisory Committee Member

As an outside director, what
do you think are the strengths
and weaknesses of the Daiken
Corporation?

What roles do you think you shouldplay to achieve the new medium-term
management plan GP25 3rd Stage?

Q2

I think the greatest achievement in the previous medium-term management plan
was that the company expanded its businesses through active investments
overseas and developed new markets while revising the domestic businessportfolio. However, Daiken Corporation’s reputation in the stock market has
not improved even though the company has been optimizing its financial
foundation. In terms of communication with investors through IR, I think thecompany is not making sufficient efforts. I believe that the company needs totake the beginning of the period of the new medium-term management plan as
an opportunity to start actively communicating with investors and inform themof its medium- to long-term management strategies and competitiveness.

I’d like to discuss the two issues confronting the company. The first issue isa lack of coordination and connection between the domestic businesses andoverseas businesses. Instead of simply expanding the size of the businesses,
the company needs to implement measures to establish organic relationships
between the domestic and overseas divisions and continuously review thebusiness model from a company-wide perspective. The second issue is thedelay in promoting diversity. Though the company seems willing to address
diversity, it needs to take the beginning of the period of the new medium-term
management plan as an opportunity to implement drastic measures.

Though the company achieved all of its management goals, except the sales
target, I think it is largely attributable to market conditions in which the pricesof US wood products, in particular, remained at a high level. On the other
hand, the company ended up facing a difficult situation in terms of revenue
because the company fell behind in encouraging the selling price pass-throughin response to the abrupt rise in raw material prices in Japan and coordination
between manufacturing and sales and between domestic and global offices wasdisrupted in the final year. I think there remains an issue as to the ability to flexibly
respond to significant changes in the economic environment.

Q3

Though the company aims to establish its image as an all-embracing company
for building materials, it needs to actually become one with substance. Though
I recognize the efforts based on the pursuit of resolving social issues byachieving the SDGs, the company should pay closer attention to its purpose(the raison d’etre as a company) to practice corporate philosophy so that thephilosophy can appeal to the reason and emotions of people working for it. I
also think that the company should develop and explain its business strategies
to this end in detail from global and technological perspectives.

The points of particular focus are (1) the launch of new materials throughR&D and new technologies, (2) contributions to the achievement of the SDGs
through the businesses, (3) expansion of overseas businesses, (4) promotionof human resource diversity, and (5) the promotion of DX. Though these points
have been incorporated into the policies, we need to pay closer attention todetermine whether effective measures are implemented and that management
resources are properly allocated as we promote the new medium-termmanagement plan.

We mainly discussed growth strategies and ESG. However, we failed to take
into consideration the abrupt changes in the economic environment, such as theemergence of geopolitical risks, in our initial discussion; the growth strategies
that we discussed simply incorporated the same course of action as before. This
failure delayed the announcement of the new medium-term management plan,
and we responded by holding discussions again. However, since the world may
drastically change in the future, we need to consider a wider range of risk factors
and hold discussions at the Board meetings.

Q4

Global expansion and M&A are vital to Daiken Corporation’s growthstrategies. I would like to become more actively involved in the calculation offair acquisition prices, the identification of the variety of risk factors, and theimplementation of PMI after acquisition by using the expertise that I developed
while involved in investment banking operations.

The role I would like to play and focus on as of the new fiscal year is tolisten to the opinions of employees. Though we failed to implement sufficientmeasures as a result of the limitations caused by the COVID-19 crisis, I would
like to listen to the opinions of midlevel managers, employees at a plant, R&D
personnel, and female employees, in particular, that we cannot listen to at theBoard meetings and use those opinions to invigorate Daiken Corporation.

In relation to the weakness of the company that I mentioned earlier, in otherwords, the delay in DX, the company needs to quickly advance the sophisticationof its human resource strategy and deepen the discussions on developing an
executive succession plan. I’d like to contribute to the implementation andachievement of the plan by using my experience in management.

When I participated in the selection process, I paid close attention to selecting
human resources with the skill to manage all domestic businesses andintegrate globalization, M&A strategies, and DX strategies, which are necessary
to implement the new medium-term management plan and can contributeto the improvement of our corporate value. Though it is difficult to select an
outside director because we cannot evaluate the candidates based on theirwhole careers, I had several interviews with the executives to get to know thembetter and focused on ensuring fairness, objectivity, and transparency.

There remain issues in terms of the diversity of the Board of directors. Though
we went through a generational change by welcoming the new members
to the Board of directors, the level of the management strategies has not
significantly improved with the new Board of directors. When we holddiscussions in Governance Committee meetings, I realize how hard it is to train
successors. The current management must pay attention to establishing thenext-generation board instead of remaining satisfied with the current Board.

In order to deepen our discussions on the succession plan, we need to link itto the sophistication of the company-wide human resource strategy. I have tosay we have not thoroughly discussed this matter. As for the skills matrix, thefirst version was developed and disclosed in November 2021. However, wehave completed it. We need to improve our skills matrix as quickly as possible
by linking it to the human resource strategy and deepening our discussions atGovernance Committee meetings and the Board meetings.

To make the company better, we should fully discuss at The Board meetings
the future direction of the company and its response to the needs of eachstakeholder. It is important for us to aim to become a company that exceeds
the conventional perception of an excellent global company and optimize all
the values we provide to society instead of simply pursuing profits. These arechallenging goals. However, by discussing them at the Board meetings andoptimizing risk-taking and the financial foundation, we can make a significant
change and promote the achievement of the SDGs.

(1) Human resource diversity, (2) R&D, and (3) management resource
allocation. (1) To make Daiken Corporation’s technological capabilities, oneof our strengths, sustainable, we need to achieve diversity so that the humanresources that support them can tolerate the risks. (2) In order to create
revenue streams and value from a long-term perspective, it is essential tolaunch sustainable materials. Though the company already has many R&D
topics with great potential, it is necessary to invest management resourcesin order to accelerate commercialization. (3) Long-term revenue streams andvalue cannot be created unless the company expands overseas on the basisof its technological capabilities with coordination and synergy. With this inmind, I would like to deepen our discussions on how to develop our businessportfolio and allocate management resources.

It is said that the world is probably at a historical turning point. First, I’d like tohold discussions from a perspective that focuses on the economy and society
for the medium- to long-term future, instead of continuing our discussions as wehave. The important topics to discuss are (1) the promotion of DX in the truest
sense of the word that leads to drastic business reform, (2) reinforcement of
the human resource strategy, and (3) sophistication of a global perspective that
may be more important and offer a major advantage to Daiken Corporation inthe future. We need to strengthen our (2) human resource strategy, in particular,from the perspective of investment in and the development of human resources.
Finally, I think the most important part of a company is its human resources.

Q5
Q6

As for long-term corporate
management, what points would you
like to focus on and discuss in depth
at the Board meetings?

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Data

The skills matrix has been disclosed
and two new directors have been
appointed. What points did you
pay attention to as a member of
the Governance Committee whenselecting them?

Though Daiken Corporation’s strengths can be summarized into R&D capabilities, productdeployment capabilities, customer base, and its integrated system, the partnership withITOCHU Corporation with which the company has formed a capital and business alliance isanother component that further improves these four main strengths. ITOCHU Corporation’s
network in the North American market offers a major advantage to the company, especiallybecause it aims to strengthen its overseas businesses. Daiken Corporation’s weakness is
its delay in DX. Human resources are essential to accelerate DX. I would like to discuss thismatter in depth at the Board meetings in order to strengthen the DX efforts by linking themto the medium- to long-term human resource strategy.

Foundation Supporting Value Creation

What were the particular points ofdiscussion when formulating the new
medium-term management plan GP25
3rd Stage?

Daiken Corporation has two strengths: strong technological capabilities andexcellent human resources. In particular, technological capabilities enable thecompany and its businesses to contribute to the achievement of the SDGs
and offer a distinct advantage to the company in this era when sustainability
is important. On the other hand, Daiken Corporation’s weakness is that it
does not fully use its R&D capabilities, the origin of its strong technologicalcapabilities. It is necessary to properly allocate management resources inorder to use the R&D capabilities to develop new businesses and improve
competitiveness.

Strategy for Value Creation

What were the achievements andissues in the previous medium-term
management plan GP25 2nd Stage?

Q1

I think our domestic customer base is significantly strong. In addition, it issafe to say that the integrated system from the development of materials andbuilding materials to the work of installation and construction is sufficiently
feasible and one of the greatest strengths of the company. However, I think thecompany should conduct R&D activities more tailored to customer needs. Asfor the product deployment capabilities, I would like the company to improve
its supply chain and use the power of IT brought about by DX in its strategies.

Daiken Group's Value Creation

Six questions for the outside directors

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